Moneycontrol Bureau
Maintaining buy rating on Jubilant Foodworks, Goldman Sachs has increased target price to Rs 1956 from Rs 1801 per share to reflect higher margins and better same-store-sales growth (SSSG) outlook in the medium term. The brokerage has also revised FY16-FY18 earnings per share (EPS) by 1-4 percent to account for lower raw material costs.
Goldman Sachs see tailwinds the next four quarters on low milk inflation and better SSSG. “Every 200 basis points change in SSSG can improve EBIT margins by 50 basis points. We believe that as consumer sentiment improves, it has the potential to deliver SSSG of 12 percent in FY17 against flattish growth in FY15, with EBITDA margin improvement of 443 bp over FY15-FY18 driven by better SSSG and breakeven of Dunkin Donuts,: it says in a report.
The management expects SSSG to rise to low double digits by end-FY16 driven by better consumer sentiment and lesser store splits, while Goldman Sachs sees 530 bps lower network growth in FY17 versus FY15.
Jubilant’s value market share improved to 69 percent in CY14 (from 67 percent in CY13) among pizza restaurants and to 14 percent (from 12 percent) among all restaurant chains. Its overall CY14 transaction growth was 25 percent, compared with an average of 9 percent for its top 3 pizza competitors in India.
The company posted net profit of Rs 31.5 crore in the January-March quarter, up 26 percent from Rs 25 crore in the corresponding quarter last fiscal. Income, during the period, also grew 25 percent to Rs 542.1 crore versus Rs 433.7 crore.
During the quarter, it added 38 new Domino's restaurants and 8 new Dunkin Donut restaurants. The company aims to open 30 Dunkin Donut restaurants.
Posted by Nasrin Sultana
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
